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GOLD has long been the ultimate hedge against political folly. Now it is becoming such folly’s collateral damage. Washington’s decision to place three Chinese gold companies on its so-called “Uyghur Forced Labour Prevention Act Entity List”, followed by the London Bullion Market Association’s suspension of their Good Delivery status, is a test of whether the United States can weaponise the financial system without ultimately weakening the system itself.
The China Gold Association says the US sanctions have no factual basis and accuses Washington of politicising “human rights” to pursue protectionism. It has also criticised the LBMA for acting without sufficient fact-checking.
The bigger danger lies in the financial shadow cast over international transactions involving Chinese companies. Good Delivery status is a passport into the London bullion market. Losing it can mean greater due-diligence costs, fewer counterparties and more complicated access to international derivatives markets.
The “UFLPA Entity List” adds another layer of uncertainty, encouraging banks, traders and suppliers to distance themselves from US-designated “politically risky” entities. Sanctions work not merely by closing doors but by making everyone nervous about opening them.
